About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance and a registered charity. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.

About Core Cities UK

Core Cities UK is an alliance of 12 cities - Belfast, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. Our mission is to unlock the full potential of our great city regions to create a stronger, fairer economy and society. We currently generate 25 per cent of the economy but with the right freedoms and powers could add an extra £100bn every year to UK GDP.

Core Cities UK has a 30 year track record of creating change in policy. Those three decades under various governments have seen us make major strides, the biggest one being the fact that all political parties now recognise cities as an opportunity to be grasped rather than a problem to be solved.

We are a leading voice in policy around devolution and decentralisation and our 2020 report with the OECD on city productivity has been used as a benchmark across the sector.

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While some positive steps have been made in establishing a framework for local investment for growth, central government must not shy away from dealing with elements which so far have not been as comprehensively addressed – such as local authority resourcing, institutional maturity and the evaluation of growth outcomes. The recommendations below would help to redress this imbalance and provide a more holistic plan for growth.

Reckoning with the capacity gap

• Central government should provide structural and institutional supports to local authorities to manage the time-consuming and complex nature of Public-Private Partnerships and the use of private finance. A weakness in public sector capacity is a primary factor contributing to PPP failures, often leading to reliance on external consultancy. Policy must focus on developing and supporting internal institutional expertise and administrative capacity to mitigate these risks.

There should be a clear and well-resourced government strategy to improve in-house commercial skills in local government. This strategy should be a focus of the government's working group on local authority skills and be developed alongside stakeholders such as the LGA and CIPFA, receiving capital allocation as an investment in national growth.

Rather than being seen as ongoing revenue pressure, local government recruitment must be seen as part-and-parcel with the capital investment programme of this government, alongside national measures like the establishment of the National Wealth Fund.

In the long run, policy should move beyond simply encouraging the acquisition of commercial skills. Central government needs to provide structural and institutional supports to local authorities to manage the time-consuming and complex nature of PPPs. A weakness in public sector capacity is a primary factor contributing to PPP failures, often leading to reliance on external consultancy. Policy must focus on developing and supporting internal institutional expertise and administrative capacity to mitigate these risks.

• Government should provide contractual frameworks for local authorities to use in structuring PPPs for local investment and regeneration, drawing lessons from past issues. This should focus on optimal risk allocation, transparency, and the exclusion of "soft" services, as demonstrated by the Welsh Mutual Investment Model.

In the whole, any future development of PPPs needs to benefit from a careful initiation and contract phase, focusing on whole-life costing, value for money, and reaching the best possible risk allocation between partners.

Policy should actively encourage and incentivise local authorities to engage in smaller-scale PPP projects initially. This approach can build a more pragmatic and positive environment for public-private collaboration, helping local institutions overcome the political caution and lack of learning capacity associated with the history of the Private Finance Initiative (PFI) regime.

• There needs to be a clarification and simplification in how public sector organisations can interact with and seek help from the range of potential supports, both new and old, in terms of both funding and investment expertise, potentially in the development of a single front door service for matching local investment prospectuses to public financial institutions.

Building institutional maturity and governance

• Government should include neighbouring strategic authorities within regions as mandatory consultees for statutory local growth plans, to ensure coherence across England's regions and to help bridge gaps in institutional maturity between authorities

Planning and development strategies can also benefit from cross-regional collaboration; in order to avoid arbitrary limits being set on Spatial Development Strategies based on geographic boundaries, regions that identify similar opportunities should be encouraged to join-up their offers for those specific opportunities on a thematic basis.

• Government must provide further clarification of how scrutiny and oversight processes are going to align with the mayoral system, both in terms of scrutinising the individual and their cabinets, as well as how they will account for the scale involved with the functions of strategic authorities.

The development of regional boards drawn from the scrutiny committees of constituent strategic authorities should be considered as a way to both enhance governance and develop institutional maturity through shared learning.

Accountability frameworks must incorporate an understanding of institutional maturity and guard against policy churn, helping to identify areas where interventions are working and specialist skills are being acquired. This type of review can help to provide a stable policy framework, which is conducive to investment.

• Policy should support the widespread adoption and implementation of structured institutional maturity models (which progress through initial, managed, defined, and optimising stages). These models, applied to functions like governance, risk management, and planning, can serve as a gap analysis tool to help new organisations rapidly progress their capabilities and acquire the cohesion and expertise necessary to attract and secure private investment.

Improving the evaluation framework

• Government should develop a single, tiered outcomes framework for local government, harmonising the Local Government Outcomes Framework (LGOF) and the Integrated Settlements Outcomes Frameworks. This framework should be robust, multi-layered, and learning-focused, drawing on the methodologies of the UK Shared Prosperity Fund evaluation strategy to measure "quality" growth, which includes social, environmental, and inclusive outcomes.

The policy direction must support the creation of a system that allows for the positive and continual self-reflection on the impact, processes, and strategy of evaluation itself. This aligns evaluation with developing the institutional maturity required for effective long-term governance and risk management.

• The forthcoming neighbourhood governance units of the English Devolution and Community Empowerment Bill should be given a role in policy scrutiny to function as 'citizen juries', especially concerning whether growth successfully extends opportunity and prosperity will have genuine influence on decision-making at the regional level.
• There is also a need for clarification on how performance based on the new, broader outcomes frameworks will interact with central government's assessment of a local authority's Best Value Duty. Policy should assure local leaders that adopting innovative, outcomes-led approaches will not expose them to undue risk of intervention based on short-term or narrow measures.
• Government should also support the development of metrics that go beyond traditional economic indicators like GDP and Real Household Disposable Income to evaluate inclusive and sustainable growth, considering factors like equality of access, empowerment, and long-term environmental capacity.
  • Policy should support the creation of national guidelines or toolkits that help local authorities and strategic bodies consistently define complex, aggregated concepts like "sustainable jobs" across sectors and departments.

While the fiscal environment is undeniably challenging, the rapidly evolving political landscape provides real opportunities for strategic and local authorities, as well as risk. Below are some best practice considerations for authorities of both tiers based on the research for this project.

Strategic authorities should:

• Leverage enhanced powers and strategic planning:
  • Develop robust, realistic statutory Local Growth Plans and Spatial Development Strategies to set clear strategic directions for regions and identify optimal investment opportunities, working closely with the National Wealth Fund and other central institutions.
• Actively engage with the rejuvenated Office for Investment to develop and market pragmatic investment proposals and attract international capital into their regions.
• Formalise inter-regional collaboration by consulting neighbouring strategic authorities on growth plans, especially for pan-regional efforts like transport infrastructure, to ensure a coherent economic vision and share expertise.
• Fully utilise powers and mechanisms such as investment zones and Mayoral Development Corporations to provide a long-term vision for investors and accelerate regeneration.
• Build internal capacity and expertise:
  • Prioritise investment in building in-house specialist commercial and financial skills to effectively manage Public-Private Partnerships (PPPs), procurement processes, and complex contracts. A lack of such skills is a significant barrier to effective project delivery and risk management.
• Foster a strong institutional culture of accountability, expert risk management, and objective strategy assessment within the authority. This requires strong leadership, continuous learning, and robust scrutiny.
• Focus on institutional maturity, understanding that well-established processes, relationships, and clear standards are crucial for attracting and securing private investment in infrastructure. Ringfencing resources for internal development can help new organisations progress rapidly through stages of evolution.

Local authorities should:

• Ensure robust governance and risk management:
  • Implement comprehensive investment reviews to ensure adherence to the Prudential Framework's hierarchy of Security, Liquidity, and then Yield.
• These strategies should include quantifiable risk assessments and robust procedures for risk management, avoiding over-reliance on debt financing for commercial yield.
• Clarify and empower effective neighbourhood governance mechanisms to ensure residents have a genuine say in decisions affecting their areas and to foster inclusivity in growth outcomes.
• Secure strategic partnerships and encourage collaboration:
  • Explore alternative PPP models like the Welsh Mutual Investment Model (MIM ), which involves public sector equity shares, excludes“soft” services, aligns with broader wellbeing objectives, and has proven effective for infrastructure delivery where capital capacity is limited.
• Engage in smaller-scale PPP projects initially to build a more positive and pragmatic environment for public-private collaboration, helping to overcome historical caution related to PFIs.
• Foster genuine partnerships with stakeholders from the private and third sectors, as well as anchor institutions like universities and hospitals, through a collaborative approach to drafting local growth plans and spatial development strategies.